Business Process Transformation at the CIA (B)

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Abstract:When Dick Calder is named head of the CIA's Directorate of Administration (DA) in 1995, he faces the task of leading a beleaguered organization through a difficult period. As the unit responsible for providing its more glamorous intelligence-gathering and analyzing counterparts with administrative servicesranging from logistics support to telephones to personnel servicesit has borne the brunt of a decade of agency budget cuts. Other directorates are not sympathetic, however, and view the DA as wasteful and unresponsive. In hopes of improving the DA's services and its customers' level of satisfaction, Calder proposes a novel solution to the directorate's woes: budget "givebacks." Under this cost-recovery scheme, the DA would give its budget back to the "mission" directorates, which would then purchase support services from the DA or, if they chose, another provider. Calder reasons that the specter of competition would improve the DA's delivery of services; at the same time, it would encourage the other directorates to buy more prudently, in line with the agency's shrinking service budget, particularly because they would be allowed to retain any savings they realized. It is a radical proposal for an inherently conservative agencyone, moreover, whose covert mission makes unusual demands on the deliverer of the most routine services. This series of organizational change cases follows Calder's efforts to implement budget givebacks in the DA. They detail his strategy for winning support for his idea, the experiences of several pilot giveback programs he initiates, and the sharp resistance he encounters both within the DA and from the other directorates.

Learning Objective:Together, the cases raise questions about adaptation to a changing political and fiscal environment, as well as the management of innovation in an organization deeply skeptical of change.